Presidential reputations often turn on economic factors beyond anyone’s control.
In Presidential politics, timing is everything. If the 1992 election had been held six months later, when an economic recovery that was already under way had become unmissable, George H. W. Bush might well have won a second term, and the technology-driven “Clinton boom” of the nineties might have become known as the “Bush-Dole boom.” If the 1984 election had been held a year earlier, when the unemployment rate was above nine per cent, Ronald Reagan might well have been a one-term President, and a Mondale Institute, in Minneapolis-St. Paul, might have become a regular stop for ambitious young Democrats seeking high office. If the Great Crash of 1929 had occurred eighteen months earlier, on Calvin Coolidge’s watch, the Democrats might have won the 1928 election and lost, as the economy worsened, in 1932—in which case F.D.R.’s New Deal might have been Hoover’s New Deal.
That may be pushing it. But the point remains: the reputations of our Presidents often turn on economic factors beyond their control. The Great Depression was a global event. The contractions in the early nineteen-eighties and in the early nineteen-nineties were driven by the Federal Reserve, as Paul Volcker sought to bring down inflation and Alan Greenspan sought to head it off before it got established. Sometimes changes in the financial markets—changes that aren’t under anybody’s direction—can prove decisive.
President Obama (in contrast to the Presidential candidate Obama) was a victim of unfortunate timing. When he entered the White House, in January, 2009, the gross domestic product and employment were both declining alarmingly, and his term in office has been largely defined by efforts to right the economy. In a diligently reported and informative new book, “The Escape Artists: How Obama’s Team Fumbled the Recovery” (Simon & Schuster), Noam Scheiber, a writer at The New Republic, quotes a conversation, during the transition, between Obama and Timothy Geithner, his choice as Treasury Secretary. “Your signature accomplishment is going to be preventing a Great Depression,” Geithner said. Obama shot back, “That’s not enough for me.” Geithner persisted, saying, “If you don’t do that, nothing else is possible.” To which Obama replied, “Yeah, but that’s not enough.”
Until now, most accounts of this Presidency have been written in a context of halting growth, stubbornly high unemployment, and disaffection on the part of many of Obama’s early supporters. That was true of Jonathan Alter’s “The Promise: President Obama, Year One,” which came out in the spring of 2010, and of Ron Suskind’s “Confidence Men: Wall Street, Washington, and the Education of a President,” which came out last fall. In an epilogue that appears to date from late last year, Scheiber writes, “That Team Obama helped avert catastrophe is indeed beyond question.” But, he goes on, “the Obamans nonetheless failed at the task they set themselves—of restoring the economy to something resembling its precrisis vitality. . . . Almost three years after Obama took office, unemployment hovered around 9 per cent.”
Actually, the unemployment rate now stands at 8.3 per cent, and many other financial indicators—G.D.P. growth, retail sales, consumer confidence—suggest that the economy is gaining strength. The stock market, reflecting this perception, has jumped about twenty per cent since October. Until last week, the President’s approval ratings were rising, and in the betting parlors he was a strong favorite to win the election. Of course, Obama’s supporters will argue that it was his policies that generated the upturn. At the end of 2010, without much fanfare, the Administration introduced a second, smaller stimulus. The White House agreed to extend the expiring Bush tax cuts and, in return, the House Republicans agreed to another package of tax cuts and spending increases that amounted to more than two hundred billion dollars. Maybe these measures did the trick; maybe they didn’t. The truth is we don’t know why hiring and spending perked up late last year. White House economists certainly didn’t see those things coming. In November, the Office of Management and Budget was predicting that, at the end of 2012, unemployment would still be running at close to nine per cent. At the moment, though, the victim of unfortunate timing seems to be Scheiber, rather than Obama.
Maybe the President was due a lucky break. Setting aside a collapse in spending and an alarming rise in unemployment, the country faced at least five major economic problems when he took over: a bombed-out real-estate market; an oversized, risk-riddled financial sector; a voracious demand for fossil fuels that had to be met by imports; stagnant wages and rising inequality; and a looming entitlements crisis that threatened to swallow the budget and bankrupt the country. All these problems had been long in the making, and none of them offered up ready solutions.
As a Presidential candidate, though, Obama was not averse to raising great expectations. Talking to the Times in the summer of 2008, he noted that Ronald Reagan “ushered in an era that reasserted the marketplace and freedom.” The next President would need to bring about a similar shift, Obama said, one that reasserted the role of an activist government, “laying the groundwork, the framework, the foundation for the market to operate effectively.”
Inevitably, many progressives—including such critics as Robert Kuttner and Joseph Stiglitz—were bitterly disappointed when Obama, in his first two years in office, backed away from positions they favored in health care, financial regulation, climate change, energy policy, and taxation. But they missed the fact that Obama was never really one of them to begin with. Despite his references to establishing a new paradigm, he wasn’t intent on facing down the malefactors of wealth, creating a Canadian-style welfare state, or forging a German-style social compact between labor and capital. In truth, Obama was a moderate young technocrat, whose first instinct was to seek the middle ground. The moment power beckoned, he tilted instinctively toward the establishment, and, in the Democratic Party that Obama had grown up in, the establishment was pro-Wall Street.
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